Western Digital has provided strong profit forecasts for the current quarter and the full year and said the flash memory market would grow faster this year.

There had been some fears that the surging demand for memory chips was fading, but Western Digital's results say otherwise.

Western Digital’s chief financial officer, Mark Long, said any easing in price would, in fact, help the industry.

“The normalisation in flash market is about expected and beneficial for the industry, creating new opportunities for flash", Long said during a conference call with analysts. “We view this normalisation as part of our business.”

Western Digital forecast current-quarter adjusted earnings of $3.20 to $3.30 per share, beating Wall Street's estimate of $3.04. Its full-year adjusted earnings forecast of $13.50 to $14.00 per share was also above market estimates of $13.42.

The forecast helped ease the data-storage device maker’s share drop to one percent in extended trading, from a decline of as much as 5.5 percent earlier despite Western Digital topping market estimates for second-quarter profit and revenue.

Benchmark analyst Mark Miller said fears over falling prices might have weighed on the stock, but the worries were overdone.

It is now expected that the flash industry’s growth this year would be near the high end of the long-term range of 35 percent to 45 percent, due to better manufacturing yields and continued adoption of 3D flash, with Western Digital matching the growth.

He said the industry’s growth was at the low end of the long-term range in 2017, with the company’s growth somewhat higher.

That helped Western Digital’s revenue increase 9.2 percent to $5.34 billion in its second quarter. Analysts on average had expected revenue of $5.30 billion.

Western Digital posted a net loss of $823 million, compared with a profit of $235 million last year, due to a $1.6 billion charge related to new US tax laws.

Figures just in from the Gartner Group showed that Samsung was the leader in chip sales in 2017.

That's largely down to undersupply in the memory market and that sector accounted for a third of semiconductor revenues last year.

Andrew Norwood, chip vice president at Gartner, said: “This is the first time Intel has been toppled since 1992.”

Intel was relegated into second position because of memory undersupply, and turned in revenues of $57,712,000,000, compared to Samsung's $61,215,000,000.

The number 10 players are Samsung, Intel, SK Hynix, Micron, Qualcomm, Broadcom, Texas Instruments, Toshiba, Western Digital and NXP. Qualcomm is in the process of buying NXP, but Broadcom is bidding for Qualcomm.

But Samsung is unlikely to stay number one for long.

Norwood quipped: “Samsung's lead is literally built on sand, in the form of memory silicon. Memory pricing will weaken in 2018, initially for NAND flash and then DRAM in 2019 as China increases its memory production capacity.”

Intel managed to grow its revenue 6.7 percent in 2017, largely from data centre processor revenues. PC revenue only grew 1.9 percent but, Norwood said, average PC prices are expected to rise “after years of decline”, the fall largely due to people buying ultramobile and two-in-one devices. Intel missed the boat on ultramobiles some years back.

Western Digital’s boffins have come up with microwave-assisted magnetic recording (MAMR) which can use the company’s existing production chain to cram a lot more storage onto a standard 3.5-inch disk.

The outfit has overcome the write head problem which is the biggest issue with traditional HDD drive storage. An average hard drive maxes out at about 10-14TB. But by integrating “a spin torque oscillator”, a new write head, and microwaves can create the energy levels to copy data within a lower magnetic field than before.

According to Western Digital, MAMR has “the capability to extend areal density gains up to four Terabits per square inch”.

By the year 2025, it hopes to be packing 40TBs into the same size drive it offers today.

So why not flash? Apparently flash storage can’t keep up with the amount of data being produced, maybe well into the next decade. Consumer products are snapping up all the flash storage so Western Digital needs to come up with ways to use the existing tech.

An MTBF of 2.5 million hours and a five year warranty enterprise is driving heads to OEMs

Western Digital has unveiled the world’s first 14TB enterprise-class hard drive featuring host-managed shingled magnetic recording (SMR) technology, HGST-branded Ultrastar Hs14. The new drive delivers 40 percent more capacity and more than twice the sequential write performance of its SMR predecessor, enabling more economical and efficient capture of the growing volume and variety of data.

With the announcement of the new drive, Western Digital is gearing up to combat the big data challenge by delivering unprecedented capacity as well as online watt/TB power efficiency for extremely low total cost of ownership (TCO). The focus on total cost of ownership includes capacity per rack, power consumption, cooling, maintenance, and acquisition cost. The drives harness two core complimentary technologies, fourth generation HelioSeal technology, and second generation host-managed SMR. Utilizing SMR technology, the drive offers a 16 percent increase in capacity while keeping highly predictable, highly reliable performance.

The Ultrastar Hs14 enterprise hard drive is currently sampling to select OEMs and comes with a five year limited warranty. Pricing on the drives has not been announced yet.

Toshiba’s board has finally flogged its Nand flash memory chip unit to an international consortium led by the US private equity group Bain Capital in a $18.9 billion deal designed to rescue the Japanese conglomerate from delisting.

The deal includes a $3 billion by Apple and smaller commitments from Dell, Seagate, Kingston and the South Korean chipmaker SK Hynix. Some minor details need to be sorted out but that should be done by the end of the day.

Toshiba’s board has come under intense pressure from the company’s biggest lenders, a trio of Japanese banks, to sell its prized asset ahead of a March 2018 deadline. Toshiba needs cash by March to prevent it from being delisted from the Tokyo Stock Exchange. On top of that, the semiconductor business requires huge amounts of investment, and Toshiba’s chip unit runs the danger of losing its competitive ability as rivals roll out big capital spending plans. The group needs the proceeds to plug a huge hole in its shareholder equity created by massive writedowns on its US nuclear business.

Analysts say the sale of the chip unit should remove that threat, though the actual completion of the deal is expected to be delayed by both antitrust scrutiny and a raft of legal actions launched by Toshiba’s joint venture partner in the chipmaking business, US group Western Digital.

Two Japanese state-backed financial institutions — the Innovation Network Corporation of Japan and the Development Bank of Japan — will join as investors once Toshiba and the winning consortium have settled legal differences over a joint venture with Western Digital.

A rival bid from the Taiwanese technology group Foxconn was described by people close to the process as “highly competitive until very late in the day”.

Western Digital has said that it is considering its options as Toshiba indicated it favoured a group of investors led by Bain Capital to buy the world’s second largest manufacturer of flash memory chips.

Toshiba said it had signed a letter of intent to negotiate with Bain and its partners, the Innovation Network Corporation of Japan and the Development Bank of Japan, both of which are controlled by the Japanese government.

Toshiba has been wavering among offers from three different groups to buy a portion of the chip business, a deal that is widely expected to be worth more than $20 billion.

In its announcement, Toshiba said the Bain group had submitted a new bid, putting it ahead of rivals led by Western Digital, the digital storage company based in the United States; and Foxconn, the contract manufacturer based in Taiwan that makes phones and other devices on behalf of Apple and other global brand names.

It said it hoped to conclude a deal by the end of September, but it added that the negotiations would not be exclusive. That means Western Digital or Foxconn could still turn the tables by submitting new, sweetened offers.

But Western Digital, which also wanted to be involved, said that Toshiba’s statement was disappointing.

“We are disappointed that Toshiba would take this action despite Western Digital’s tireless efforts to reach a resolution that is in the best interests of all stakeholders. Throughout our ongoing dialogue with Toshiba, we have been flexible, constructive and have submitted numerous proposals to specifically address Toshiba’s stated concerns. Our goal has been — and remains — to reach a mutually beneficial outcome that satisfies the needs of Toshiba and its stakeholders, and most importantly, ensures the longevity and continued success of the JVs”, the outfit said.

A spokesman said that it was surprising that Toshiba would continue to pursue a transaction with a consortium led by Korea-based SK Hynix Inc. and Bain Capital Japan without SanDisk’s consent, as the language in the relevant JV agreements is unambiguous, and multiple courts have ruled in favour of protecting SanDisk’s contractual rights.

It said that it was confident in its ability to protect its JV interests and consent rights.

So in otherwords it might end up fighting the merger. Western Digital’s arbitration requests filed on May 14, 2017, and July 5, 2017, continue to move forward in the ICC International Court of Arbitration.

Toshiba shares rose more than four percent on Wednesday Western Digital is alleged to have offered to drop out of a group bidding for its flash memory chip business to take a stronger position in their joint venture instead.

The move could see Toshiba finally flog the chip business after months of delays, providing it with the funds needed to cover billions of dollars in liabilities arising from the failure of U.S. nuclear unit Westinghouse.

Toshiba’s board is due to meet on today to discuss the deal. Western Digital’s potential participation will be the subject of future talks among the consortium members, they said.

Toshiba and Western Digital failed to seal a deal by a previously-planned deadline due to a disagreement over the U.S. firm’s future stake in the business, sources have said.

Failure to clinch a sale in the next few weeks could mean that it may not clear all necessary regulatory approvals by the end of the financial year in March, which would likely lead to Toshiba reporting negative equity for two years in a row, increasing its chances of its shares being delisted.

Meanwhile Toshiba has said it has decided to build a new semiconductor manufacturing facility in Iwate, northern Japan, even as it seeks to sell its memory chip unit to raise funds.

It is considering whether its chip joint venture partner SanDisk, owned by Western Digital, will take part in the investment, it said in a statement.

Western Digital Corp’s CEO has apologised to his counterpart at Toshiba for strained ties after the US firm sued to keep their chip joint venture from being sold to rival bidders.

Tosh has wanted to put its chip unit, - worth between $17 billion to $18 billion, up for sale as it scrambles to cover liabilities at its bankrupt US nuclear unit. Relations between Western Digital and its chips partner quickly frayed, however, as Toshiba entertained other bids.

It was not immediately clear what impact the letter had on relations between the two firms, but in mid-August they agreed to try to overcome their dispute and enter into serious discussions.

They failed to clinch a deal by end-August as planned, however, and Toshiba said on Thursday that it would continue to talk to the Western Digital consortium as well as two other suitors - groups led by Bain Capital and by Taiwan’s Foxconn.

In a letter to Toshiba Chief Executive Steve Milligan wrote that he was not naturally litigious and had never sued anyone.

“I understand that the litigation and ongoing disputes have created significant ill will for some within Toshiba. This is regrettable and I am deeply sorry for the feelings this has created.”

In the letter, Milligan also sought to reassure Toshiba CEO Satoshi Tsunakawa that the U.S. firm would address any concerns that Apple, a key customer of Toshiba’s NAND flash memory chips, might have about a deal.

People familiar with the talks have said Apple is likely concerned about being on the backfoot in pricing power if Toshiba, the world’s No. 2 producer of NAND chips, struck a deal with Western Digital, which ranks No. 3.

Apple joined Bain’s consortium bidding for Toshiba’s chip unit, sources with direct knowledge of the matter said this week.

Milligan said in the letter that Western Digital was only offering to hold convertible bonds in the chip business, Toshiba Memory Corp (TMC), and would have no voting rights or board seats.

“Additionally, Western Digital will not have any ability to interfere in the management or operations of TMC, and we have no desire or expectations to the contrary,” he said.

“We are highly confident that Apple will understand this structure and be comforted by it,” he said, suggesting that the two sides meet with Apple to address any questions.

Any delays to Toshiba clinching a deal could allow rival Samsung extend its lead in advanced 3D chips, a risk Milligan cited as he said their differences were “down to only a very small number of outstanding issues”.

He offered to drop all legal action on the part of Western Digital once they had clinched a deal.

“As you know, time is not our friend,” he wrote. “The only people benefiting from this prolonged dispute are the competitors to our joint ventures.”

Western Digital's chief executive is in Tokyo to finalise an agreement to buy the Toshiba memory chip business, ending months of dispute over the auction.

Toshiba has been trying to flog off its flash memory unit to cover losses from its bankrupt US nuclear business Westinghouse, but any deal it managed to set up was scuppered by Western Digital, which is Tosh's partner in the business.

A group including Western Digital, US private equity firm KKR and Japanese government investors are offering around $17.3 billion for the unit. The group and Toshiba aim to announce a deal by August 31 when Toshiba’s board meets.

Some senior Toshiba executives had initially balked at Western Digital’s offer, because they wanted $18 billion and were worried about government objections to a sale to a non-Japanese company. But sources said the US firm took a conciliatory tack and decided not to seek a management role in the new business and limit its stake to no more than one-third even when it converts the bonds to equity.

Toshiba and Western Digital are the world’s second and third largest producer of NAND chips.

A consortium that includes Western Digital is offering $17.4 billion for Toshiba's memory chip business, which the Japanese conglomerate is trying to sell to cover losses from its US nuclear business, sources said this morning

Western Digital's consortium is set to offer $17.4 billion through convertible bonds and will not seek voting rights in the business, sources familiar with the deal said, requesting anonymity because the talks were confidential.

The consortium also includes US private equity firm KKR, the state-backed Innovation Network of Japan and Development Bank of Japan, all of which will offer $2,742,900,000 each for the chip business, the sources said.

Toshiba said it could not comment on discussions with potential suitors for the chips business. Western Digital said it could not immediately comment, while KKR declined to comment.

Toshiba was looking at getting about $18 billion for the memory business to cover the costs of its US nuclear business write-downs.